How a business transition plan enhances selling your business

A transition plan that allows the business owner to sell the business for the highest price possible in the shortest amount of time to the most qualified buyer is generally the top of the wish list for most business owners. Because the business owner lives and breathes their business they become emotionally attached to their customers, employees, suppliers and other business partners as the business is a reflection of who they are.

Deciding to sell the business and move to a new role is much more complicated than most business owners realize. Sure, you can start by putting the business on the market and see what happens, but that’s not a good strategy. If customers, suppliers, competitors or others find out, it can severely damage the business.

So where does the business owner start? It’s my suggestion that one of the starting places is with a transition plan. A transition plan, at its simplest level, is an attempt to define the needs of the business owner and then systematically move to their desired outcome. And I am not just talking about the actual process of selling the business. I would suggest the owner go back to some more basic level and understand why they are selling, what they hope to achieve and probably most important of all, what are they planning on moving to and are they excited about it. If they are not excited about it, chances are they will do all the work to get the business ready for sale, advertise and market the business, qualify the buyers, negotiate a deal, do all the due diligence, prepare to close escrow and then change their mind because they would prefer to continue owning and operating the business than playing endless rounds of golf or become a full-time babysitter looking after the grand kids etc.

So what should be included in the transition plan? The questions and answers can be endless. It’s what makes sense to the owner and their specific situation. Some sample ideas include the following: • Why does the business owner want to transition the ownership of the business?
• Are there any suitable candidates and if so, why? (The answer could be family or a current employee or a local larger competitor or …)
• If not, why not? (Is the industry the business is in dying out, are there new technologies coming that make this business behind the times etc.)
• Are there any specifics that would prevent the business transitioning that need to be removed?
• What is actually being transitioned?
• Is the owner the business or is the business an independent asset that would be attractive to a buyer?
• How involved day to day is the current owner and if they are heavily involved, are processes and procedures written down that would help a new owner and encourage them to take the risk and buy the business?
• What is the owner’s financial situation? That is, can they afford to retire?
• Does the owner rely on a weekly or monthly income from the business that if stopped because they no longer own the business they can still survive?
• What is the current owner transitioning to?

There is no shortage of questions to ask. The important thing is to ask the questions and keep asking them until they are all answered or its clear what the next steps need to be. The goal of building a transition plan is to clearly help the owner arrive at a decision that makes perfect sense to them and be empowered for any next steps that they take.